2. Material accounting policies (Contd.)
Impairment of financial assets (other than
subsequent measurement at fair value)
Measurement of impairment of financial assets
require use of estimates and judgements, which have
been explained in the note on financial instruments
under impairment of financial assets. (refer note 2(m),
page F38).
Useful lives of property, plant and equipment,
right-of-use assets and intangible assets
The Company reviews the useful life of property, plant
and equipment, right-of-use assets and intangible assets
at the end of each reporting period. This reassessment
may result in change in depreciation and amortisation
expense in future periods. The policy has been detailed
out in note 2(e), page F34 , note 2(j), page F36 and note
2(k), page F37.
Provisions and contingent liabilities
A provision is recognised when the Company has a
present obligation, legal or constructive, as a result
of past events and it is probable that the outflow of
resources will be required to settle the obligation, in
respect of which a reliable estimate can be made. This
includes provisions on decommissioning, site restoration
and environmental provisions as well, which may change
where changes in estimated reserves affect expectations
about the timing or cost of these activities. All provisions
are reviewed at each balance sheet date and adjusted to
reflect the current best estimates.
The Company uses significant judgements to assess
contingent liabilities. Contingent liabilities are disclosed
when there is a possible obligation arising from past
events, the existence of which will be confirmed only
by the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control
of the Company or a present obligation that arises from
past event where it is either not probable that an outflow
of resources will be utilised to settle the obligation or
a reliable estimate of the amount cannot be made.
Contingent assets are neither recognised nor disclosed
in the financial statements. Further details are set out in
note 19, page F90 and note 34(A), page F107.
Fair value measurements of financial instruments
When the fair value of financial assets and financial
liabilities recorded in the balance sheet cannot be
measured based on quoted prices in active markets,
their fair value is measured using valuation techniques
including Discounted Cash Flow Model. The inputs to
these models are taken from observable markets where
possible, but where this is not feasible, a degree of
judgement is required in establishing the fair values.
Judgements include consideration of inputs such
as liquidity risks, credit risks and volatility. Changes
in assumptions about these factors could affect the
reported fair value of financial instruments. Further
details are set out in note 37, page F118.
Leases
The Company evaluates if an arrangement qualifies to
be a lease as per the requirements of Ind AS 116 "Leases".
Identification of a lease requires significant judgement in
assessing the terms and conditions of the arrangement
including lease term, anticipated renewals and the
applicable discount rate.
The lease payments are discounted using the interest
rate implicit in the lease, if that rate can be readily
determined. If that rate cannot be readily determined,
the Company uses incremental borrowing rate.
Retirement benefit obligations
The Company's retirement benefit obligations are
subject to a number of assumptions including discount
rates, inflation, salary growth and mortality rate.
Significant assumptions are required when setting
these criteria and a change in these assumptions would
have a significant impact on the amount recorded in
the Company's balance sheet and the statement of
profit and loss. The Company sets these assumptions
based on previous experience and third party actuarial
advice. The assumptions are reviewed annually and
adjusted following actuarial and experience changes.
Further details on the Company's retirement benefit
obligations, including key assumptions are set out in
note 33, page F99.
(d) Business combination under common control
Business combinations involving entities or businesses
under common control are accounted for using the
pooling of interest method. Under pooling of interest
method, the assets and liabilities of the combining
entities or businesses are reflected at their carrying
amounts after making adjustments necessary to
harmonise the accounting policies. The financial
information in the financial statements in respect of prior
periods is restated as if the business combination had
occurred from the beginning of the preceding period in
the financial statements, irrespective of the actual date of
the combination. The identity of the reserves is preserved
in the same form in which they appeared in the financial
statements of the transferor and the difference, if any,
between the amount recorded as share capital issued
plus any additional consideration in the form of cash
or other assets and the amount of share capital of the
transferor is transferred to capital reserve.
(e) Property, plant and equipment
Property, plant and equipment is stated at cost or deemed
cost applied on transition to Ind AS, less accumulated
depreciation and impairment. Cost includes all direct
costs and expenditures incurred to bring the asset to its
working condition and location for its intended use. Trial
run expenses are capitalised. Borrowing costs incurred
during the period of construction is capitalised as part
of cost of qualifying asset.
Depreciation is provided so as to write off, on a straight¬
line basis, the cost/deemed cost of property, plant and
equipment to their residual value. These charges are
commenced from the dates the assets are available for
their intended use and are spread over their estimated
useful economic lives. The estimated useful lives of
assets, residual values and depreciation method are
reviewed regularly and revised when necessary.
Depreciation on assets under construction commences
only when the assets are ready for their intended use.
The estimated useful lives for the main categories of
property, plant and equipment are:
Property, plant and equipment are evaluated for
recoverability wherever there is any indication that
their carrying value may not be recoverable. If any such
indication exists, the recoverable amount being the
higher of fair value less costs to sell and value in use is
determined on an individual asset basis. In cases where
the asset does not generate cash flows that are largely
independent from other assets, the recoverable amount
is determined for the cash generating unit (CGU) to
which the asset belongs. In assessing value in use, the
estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects
current market assessment of the time value of money
and the risk specific to the asset for which the estimates
of future cash flows have not been adjusted.
If the recoverable value of an asset (CGU) is estimated to
be less than its carrying amount, the carrying amount of
the asset (CGU) is reduced to its recoverable value. An
impairment loss is recognised in the statement of profit
and loss.
Mining assets are amortised over the useful life of the
mine or lease period whichever is lower. For certain
mining assets, where unit of production is considered to
be more reflective of the pattern of use, amortisation is
done based on unit of production method.
Major furnace relining expenses are depreciated over a
period of 10 years (average expected life).
Freehold land is not depreciated.
* For these class of assets, based on internal assessment
and independent technical evaluation carried out by
chartered engineers, the Company and some of its
subsidiaries believe that the useful lives as given above
best represent the period over which such Company
expects to use these assets. Hence the useful lives
for these assets are different from the useful lives as
prescribed under Part C of Schedule II of the Companies
Act, 2013.
Exploration for and evaluation of mineral
resources
Expenditures associated with search for specific mineral
resources are recognised as exploration and evaluation
assets. The following expenditure comprises the cost of
exploration and evaluation assets:
• obtaining rights to explore and evaluate mineral
reserves and resources including costs directly related
to this acquisition
• researching and analysing existing exploration data
• conducting geological studies, exploratory drilling
and sampling
• examining and testing extraction and
treatment methods
• compiling pre-feasibility and feasibility studies
• activities in relation to evaluating the technical
feasibility and commercial viability of extracting a
mineral resource.
Administration and other overhead costs are charged
to the cost of exploration and evaluation assets only if
directly related to an exploration and evaluation project.
I f a project does not prove viable, all irrecoverable
exploration and evaluation expenditure associated with
the project net of any related impairment allowances is
written off to the statement of profit and loss.
The Company measures its exploration and evaluation
assets at cost and classifies as property, plant and
equipment or intangible assets according to the nature
of the assets acquired and applies the classification
consistently. To the extent that a tangible asset is
consumed in developing an intangible asset, the amount
reflecting that consumption is capitalised as a part of the
cost of the intangible asset.
As the capitalised exploration asset is not available for
use, it is not depreciated. All exploration and evaluation
assets are monitored for indications of impairment.
An exploration and evaluation asset is no longer
classified as such when the technical feasibility and
commercial viability of extracting a mineral resource
are demonstrable and the development of the deposit
is sanctioned by the management. The carrying value of
such exploration and evaluation asset is reclassified to
mining assets.
(g) Development expenditure for mineral reserves
Development is the establishment of access to mineral
reserves and other preparations for commercial
production. Development activities often continue
during production and include:
• sinking shafts and underground drifts (often called
mine development)
• making permanent excavations
• developing passageways and rooms or galleries
• building roads and tunnels and
• advance removal of overburden and waste rock.
Development (or construction) also includes the
installation of infrastructure (e.g., roads, utilities and
housing), machinery, equipment and facilities.
Development expenditure is capitalised and presented
as part of mining assets. No depreciation is charged
on the development expenditure before the start of
commercial production.
(h) Provision for restoration and environmental costs
The Company has liabilities related to restoration of soil
and other related works, which are due upon the closure
of certain of its mining sites.
Such liabilities are estimated on a case-by-case based
on available information, considering applicable local
legal requirements. The estimation is made using
existing technology, at current prices, and discounted
using an appropriate discount rate where the effect of
time value of money is material. Future restoration and
environmental costs, discounted to net present value, are
capitalised and the corresponding restoration liability
is raised as soon as the obligation to incur such costs
arises. Future restoration and environmental costs are
capitalised in property, plant and equipment or mining
assets as appropriate and are depreciated over the life
of the related asset. The effect of time value of money
on the restoration and environmental costs liability is
recognised in the statement of profit and loss.
(i) Stripping Costs
The Company separates two different types of stripping
costs that are incurred in surface mining activity:
• developmental stripping costs and
• production stripping costs
Developmental stripping costs which are incurred in
order to obtain access to quantities of mineral reserves
that will be mined in future periods are capitalised as part
of mining assets.
Capitalisation of developmental stripping costs ends
when the commercial production of the mineral reserves
begins. A mine can operate several open pits that are
regarded as separate operations for the purpose of mine
planning and production. In this case, stripping costs
are accounted for separately, by reference to the ore
extracted from each separate pit. If, however, the pits
are highly integrated for the purpose of mine planning
and production, stripping costs are aggregated too.
The determination of whether multiple pit mines are
considered separate or integrated operations depends
on each mine's specific circumstances. The following
factors normally point towards the stripping costs for
the individual pits being accounted for separately:
• mining of the second and subsequent pits is
conducted consecutively with that of the first pit,
rather than concurrently
• separate investment decisions are made to develop
each pit, rather than a single investment decision
being made at the outset
• the pits are operated as separate units in terms of
mine planning and the sequencing of overburden and
ore mining, rather than as an integrated unit
• expenditures for additional infrastructure to support
the second and subsequent pits are relatively large
• the pits extract ore from separate and distinct ore
bodies, rather than from a single ore body.
The relative importance of each factor is considered by
the management to determine whether, the stripping
costs should be attributed to the individual pit or to the
combined output from the several pits.
Production stripping costs are incurred to extract the ore
in the form of inventories and/or to improve access to an
additional component of an ore body or deeper levels of
material. Production stripping costs are accounted for
as inventories to the extent the benefit from production
stripping activity is realised in the form of inventories.
The Company recognises a stripping activity asset in the
production phase if, and only if, all of the following are met:
• it is probable that the future economic benefit
(improved access to the ore body) associated with the
stripping activity will flow to the Company
• the Company can identify the component of the ore
body for which access has been improved and
• the costs relating to the improved access to that
component can be measured reliably.
Such costs are presented within mining assets. After
initial recognition, stripping activity assets are carried at
cost/deemed cost, less accumulated amortisation and
impairment. The expected useful life of the identified
component of the ore body is used to depreciate or
amortise the stripping asset.
(j) Intangible assets
Software costs and other intangible assets are included in
the balance sheet as intangible assets when it is probable
that associated future economic benefits would flow to
the Company. In this case they are measured initially at
purchase cost and then amortised on a straight-line basis
over their estimated useful lives.
Subsequent to initial recognition, intangible assets with
definite useful lives are reported at cost or deemed
cost applied on transition to Ind AS, less accumulated
amortisation and accumulated impairment losses.
Intangible assets are evaluated for recoverability
wherever there is any indication that their carrying value
may not be recoverable. If any such indication exists,
the recoverable amount being the higher of fair value
less costs to sell and value in use is determined on an
individual asset basis. In cases where the asset does not
generate cash flows that are largely independent from
other assets, the recoverable amount is determined for
the cash generating unit (CGU) to which the asset belongs.
If the recoverable value of an asset (CGU) is estimated to
be less than its carrying amount, the carrying amount of
the asset (CGU) is reduced to its recoverable value. An
impairment loss is recognised in the statement of profit
and loss.
(k) Leases
The Company determines whether an arrangement
contains a lease by assessing whether the fulfilment
of a transaction is dependent on the use of a specific
asset and whether the transaction conveys the right to
control the use of that asset to the Company in return
for payment.
The Company as lessee
The Company accounts for each lease component within
the contract separately from non-lease components
and allocates the consideration in the contract to each
lease component on the basis of the relative stand-alone
price of the lease component and the aggregate stand¬
alone price of the non-lease components. The Company
recognises right-of-use asset representing its right to
use the underlying asset for the lease term at the lease
commencement date. The cost of the right-of-use asset
measured at inception comprises of the amount of initial
measurement of lease liability adjusted for any lease
payments made at or before the commencement date.
Certain lease arrangements include options to extend
or terminate the lease before the end of the lease term.
The right-of-use assets and lease liabilities include these
options when it is reasonably certain that such options
would be exercised.
The right-of-use assets are subsequently measured at
cost less any accumulated depreciation, accumulated
impairment losses, if any, and adjusted for any re¬
measurement of the lease liability. The right-of-use
assets are depreciated using the straight-line method
from the commencement date over the shorter of lease
term or useful life of right-of-use asset.
Right-of-use assets are tested for impairment whenever
there is any indication that their carrying amounts may
not be recoverable. Impairment loss, if any, is recognised
in the statement of profit and loss.
Lease liability is measured at the present value of the
lease payments that are not paid at the commencement
date of the lease. The lease payments are discounted
using the interest rate implicit in the lease, if that rate
can be readily determined. If that rate cannot be readily
determined, the Company uses incremental borrowing
rate. The lease liability is subsequently remeasured
by increasing the carrying amount to reflect interest
on the lease liability, reducing the carrying amount to
reflect the lease payments made and remeasuring the
carrying amount to reflect any reassessment or lease
modifications. The Company recognises the amount of
the re-measurement of lease liability as an adjustment to
the right-of-use asset. Where the carrying amount of the
right-of-use asset is reduced to zero and there is a further
reduction in the measurement of the lease liability, the
Company recognises any remaining amount of the re¬
measurement in the statement of profit and loss.
Variable lease payments not included in the measurement
of the lease liabilities are expensed to the statement
of profit and loss in the period in which the events or
conditions which trigger those payments occur.
Payment made towards leases for which non-cancellable
term is 12 months or lesser (short-term leases) and low
value leases are recognised in the statement of Profit and
Loss as rental expenses over the tenor of such leases.
The Company as lessor
(i) Operating lease - Rental income from operating
leases is recognised in the statement of profit
and loss on a straight-line basis over the term
of the relevant lease unless another systematic
basis is more representative of the time pattern
in which economic benefits from the leased
asset is diminished. Initial direct costs incurred in
negotiating and arranging an operating lease are
added to the carrying value of the leased asset
and recognised on a straight-line basis over the
lease term.
(ii) Finance lease - When assets are leased out under
a finance lease, the present value of minimum
lease payments is recognised as a receivable.
The difference between the gross receivable and
the present value of receivable is recognised
as unearned finance income. Lease income is
recognised over the term of the lease using the
net investment method before tax, which reflects
a constant periodic rate of return. Such rate is the
interest rate which is implicit in the lease contract.
(l) Investments in subsidiaries, associates and joint
ventures
During the year ended March 31, 2025, the Company has
voluntarily changed its accounting policy in keeping with
the provisions of Ind AS 8 "Accounting Policies, Changes
in Accounting Estimates and Errors" to measure its equity
investments in subsidiaries in the standalone financial
statements from cost less impairment as per Ind AS 27
"Separate Financial Statements" to fair value through
other comprehensive income as per Ind AS 109 "Financial
instruments" with retrospective effect.
Equity investments in subsidiaries are now classified
as "Fair Value through Other Comprehensive Income
(FVTOQ)" with changes in fair value of such investments
being recognised through "Other Comprehensive
Income (OCI)" as on each reporting date.
The Company's management believes that this change
in accounting policy provides reliable and more relevant
information about the effects of transactions, other
events or conditions on the entity's financial position and
financial performance to the users of financial statements.
To ensure this, and consequent to the change in
accounting policy, the previous period comparatives
have accordingly been re-stated. The resulting impact
in the financial statements are disclosed in Note 48,
page 132.
Investments in associates and joint ventures are carried
at cost/deemed cost applied on transition to Ind AS,
less accumulated impairment losses, if any. Where an
indication of impairment exists, the carrying amount of
investment is assessed and an impairment provision is
recognised, if required, immediately to its recoverable
amount, being the higher of value in use or fair value less
costs to sell. On disposal of such investments, difference
between the net disposal proceeds and carrying amount
is recognised in the statement of profit and loss.
(m) Financial instruments
Financial assets and financial liabilities are recognised
when the Company becomes a party to the contractual
provisions of the instrument. Financial assets and
liabilities are initially measured at fair value. Transaction
costs that are directly attributable to the acquisition or
issue of financial assets and financial liabilities (other
than financial assets and financial liabilities at fair value
through profit and loss) are added to or deducted from
the fair value measured on initial recognition of financial
asset or financial liability. The transaction costs directly
attributable to the acquisition of financial assets and
financial liabilities at fair value through profit and loss are
immediately recognised in the statement of profit and
loss. Trade receivables that do not contain a significant
financing component are measured at transaction price.
(I) Financial assets
Cash and bank balances
Cash and bank balances consist of:
(i) Cash and cash equivalents - which includes cash
in hand, deposits held at call with banks and other
short-term deposits which are readily convertible
into known amounts of cash, are subject to an
insignificant risk of change in value and have
original maturities of less than three months. These
balances with banks are unrestricted for withdrawal
and usage.
(ii) Other balances with banks - which also include
balances and deposits with banks that are restricted
for withdrawal and usage.
Financial assets at amortised cost
Financial assets are subsequently measured at amortised
cost if these financial assets are held within a business
model whose objective is to hold these assets in order to
collect contractual cash flows and the contractual terms
of the financial asset give rise on specified dates to cash
flows that are solely payments of principal and interest
on the principal amount outstanding.
Financial assets measured at fair value
Financial assets are measured at fair value through other
comprehensive income if such financial assets are held
within a business model whose objective is to hold these
assets in order to collect contractual cash flows and to
sell such financial assets and the contractual terms of the
financial asset give rise on specified dates to cash flows
that are solely payments of principal and interest on the
principal amount outstanding.
The Company in respect of certain equity investments
(other than in associates and joint ventures) which are
not held for trading has made an irrevocable election
to present in other comprehensive income subsequent
changes in the fair value of such equity instruments. Such
an election is made by the Company on an instrument
by instrument basis at the time of initial recognition of
such equity investments. These investments are held for
medium or long-term strategic purpose. The Company
has chosen to designate these investments in equity
instruments as fair value through other comprehensive
income as the management believes this provides a
more meaningful presentation for medium or long¬
term strategic investments, than reflecting changes in
fair value immediately in the statement of profit and loss.
Financial assets not measured at amortised cost or at fair
value through other comprehensive income are carried
at fair value through profit and loss.
Interest income
I nterest income is accrued on a time proportion basis, by
reference to the principal outstanding and effective
interest rate applicable and is recognised in the
statement of profit or loss.
Dividend income
Dividend income from investments is recognised in
the statement of profit or loss when the right to receive
payment has been established.
Impairment of financial assets
Loss allowance for expected credit losses is recognised
for financial assets measured at amortised cost and fair
value through other comprehensive income.
The Company recognises life time expected credit
losses for all trade receivables that do not constitute a
financing transaction.
For financial assets (apart from trade receivables that do
not constitute of financing transaction) whose credit risk
has not significantly increased since initial recognition,
loss allowance equal to twelve months expected credit
losses is recognised. Loss allowance equal to the lifetime
expected credit losses is recognised if the credit risk
of the financial asset has significantly increased since
initial recognition.
De-recognition of financial assets
The Company de-recognises a financial asset only when
the contractual rights to the cash flows from the asset
expire, or it transfers the financial asset and substantially
all risks and rewards of ownership of the asset to
another entity.
If the Company neither transfers nor retains substantially
all the risks and rewards of ownership and continues to
control the transferred asset, the Company recognises its
retained interest in the assets and an associated liability
for amounts it may have to pay.
I f the Company retains substantially all the risks and
rewards of ownership of a transferred financial asset, the
Company continues to recognise the financial asset and
also recognises a borrowing for the proceeds received.
[II) Financial liabilities and equity instruments
Classification as debt or equity
Financial liabilities and equity instruments issued by
the Company are classified according to the substance
of the contractual arrangements entered into and the
definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences
a residual interest in the assets of the Company after
deducting all of its liabilities. Equity instruments
are recorded at the proceeds received, net of direct
issue costs.
Financial liabilities
Trade and other payables are initially measured at fair
value, net of transaction costs, and are subsequently
measured at amortised cost, using the effective interest
rate method where the time value of money is significant.
Interest bearing bank loans, overdrafts and issued debt
are initially measured at fair value and are subsequently
measured at amortised cost using the effective interest
rate method. Any difference between the proceeds (net
of transaction costs) and the settlement or redemption of
borrowings is recognised over the term of the borrowings
in the statement of profit and loss.
De-recognition of financial liabilities
The Company de-recognises financial liabilities
when, and only when, the Company's obligations are
discharged, cancelled or they expire.
Derivative financial instruments and hedge
accounting
In the ordinary course of business, the Company uses
certain derivative financial instruments to reduce
business risks which arise from its exposure to
foreign exchange, base metal prices and interest rate
fluctuations. The instruments are confined principally
to forward foreign exchange contracts, forward rate
agreements, cross currency swaps, interest rate swaps
and collars. The instruments are employed as hedges of
transactions included in the financial statements or for
highly probable forecast transactions/firm contractual
commitments. These derivatives contracts do not
generally extend beyond six months, except for certain
currency swaps and interest rate derivatives.
Derivatives are initially accounted for and measured at
fair value on the date the derivative contract is entered
into and are subsequently remeasured to their fair value
at the end of each reporting period.
The Company adopts hedge accounting for forward
foreign exchange, interest rate and commodity contracts
wherever possible. At the inception of each hedge, there
is a formal, documented designation of the hedging
relationship. This documentation includes, inter alia,
items such as identification of the hedged item and
transaction and nature of the risk being hedged. At
inception, each hedge is expected to be highly effective
in achieving an offset of changes in fair value or cash
flows attributable to the hedged risk. The effectiveness
of hedge instruments to reduce the risk associated with
the exposure being hedged is assessed and measured at
the inception and on an ongoing basis. The ineffective
portion of designated hedges is recognised immediately
in the statement of profit and loss.
When hedge accounting is applied:
• for fair value hedges of recognised assets and
liabilities, changes in fair value of the hedged assets
and liabilities attributable to the risk being hedged,
are recognised in the statement of profit and loss and
compensate for the effective portion of symmetrical
changes in the fair value of the derivatives.
• for cash flow hedges, the effective portion of the
change in the fair value of the derivative is recognised
directly in other comprehensive income and the
ineffective portion is recognised in the statement
of profit and loss. If the cash flow hedge of a firm
commitment or forecasted transaction results in the
recognition of a non-financial asset or liability, then,
at the time the asset or liability is recognised, the
associated gains or losses on the derivative that had
previously been recognised in equity are included
in the initial measurement of the asset or liability.
For hedges that do not result in the recognition of a
non-financial asset or a liability, amounts deferred in
equity are recognised in the statement of profit and
loss in the same period in which the hedged item
affects the statement of profit and loss.
In cases where hedge accounting is not applied, changes
in the fair value of derivatives are recognised in the
statement of profit and loss as and when they arise.
Hedge accounting is discontinued when the hedging
instrument expires or is sold, terminated, or exercised,
or no longer qualifies for hedge accounting. At that time,
any cumulative gain or loss on the hedging instrument
recognised in equity is retained in equity until the
forecasted transaction occurs. If a hedged transaction is
no longer expected to occur, the net cumulative gain or
loss recognised in equity is transferred to the statement
of profit and loss.
Further details on the Company's financial instruments
are set out in note 37, page 118.
(n) Employee benefits
Defined contribution plans
Contributions under defined contribution plans are
recognised as an expense for the period in which the
employee has rendered the service. Payments made to
state managed retirement benefit schemes are dealt
with as payments to defined contribution schemes
where the Company's obligations under the schemes
are equivalent to those arising in a defined contribution
retirement benefit scheme.
Defined benefit plans
For defined benefit retirement schemes, the cost of
providing benefits is determined using the Projected
Unit Credit Method, with actuarial valuation being
carried out at each year-end balance sheet date.
Re-measurement gains and losses of the net defined
benefit liability/(asset) are recognised immediately in
other comprehensive income. The service cost and net
interest on the net defined benefit liability/(asset) are
recognised as an expense within employee costs.
Past service cost is recognised as an expense when the
plan amendment or curtailment occurs or when any
related restructuring costs or termination benefits are
recognised, whichever is earlier.
The retirement benefit obligations recognised in the
balance sheet represents the present value of the
defined benefit obligations as reduced by the fair value
of plan assets.
Compensated absences
Liabilities recognised in respect of other long-term
employee benefits such as annual leave and sick leave
are measured at the present value of the estimated future
cash outflows expected to be made by the Company in
respect of services provided by employees up to the
reporting date using the projected unit credit method
with actuarial valuation being carried out at each year-
end balance sheet date. Actuarial gains and losses arising
from experience adjustments and changes in actuarial
assumptions are charged or credited to the statement
of profit and loss in the period in which they arise.
Compensated absences which are not expected to
occur within twelve months after the end of the period
in which the employee renders the related service are
recognised based on actuarial valuation.
(o) Inventories
Inventories comprise the followings:
a) Raw materials,
b) Work-in-progess,
c) Finished and semi-finished goods
d) Stock-in-trade, and
e) Stores and spares.
Inventories are recorded at the lower of cost and net
realisable value. Cost is ascertained on a weighted
average basis. Costs comprise direct materials and, where
applicable, direct labour costs and those overheads that
have been incurred in bringing the inventories to their
present location and condition. Net realisable value is
the price at which the inventories can be realised in the
normal course of business after allowing for the cost of
conversion from their existing state to a finished condition
and for the cost of marketing, selling and distribution.
Provisions are made to cover slow moving and obsolete
items based on historical experience of utilisation on
a product category basis, which involves individual
businesses considering their product lines and
market conditions.
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